Homework aviation

Airline Operations

Assignment Chapter 7 Part 1

1. Why is the airline industry considered oligopolistic? What are some of the barriers to becoming a certificated carrier today? Compare the barriers today with those before deregulation. How has the number of carriers, and their market share, changed since deregulation?

2. Define economies of scale, scope, and density. How do they apply to the major carriers? When can economies of scale turn into diseconomies of scale? Give several examples of economies of scale in the airline industry today.

3. Why has there been a tendency toward mergers in oligopolistic industries over the years? What are some of the reasons air carriers have merged? What do you think the structure of the airline industry will be like in 2015?

4. Give some examples of how government (particularly the federal government) has assisted the industry financially over the years. Why is there such a high technological turnover in the industry? When one carrier acquires new flight equipment, why do the other competing lines have to do the same?

5. What are the three major operating expenses of airlines? Why are they so high? How have they changed over the years? Why are labor costs such a competitive advantage for start-up airlines over more established carriers?